There is something incredible about the first dollar a customer gives you.
Getting that first dollar from your customer is a huge milestone because people value their money, and it takes a leap of faith for people to pay for what you have to offer.
That first dollar is a gamble on you; a bet that in return for the dollar you will give something that is more valuable to the customer than the dollar itself.
Of course, that gamble doesn't have to be risky.
You can make it easier for your potential customers (or leads) to become paying customers by making their first purchase as painless and risk-free as possible.
You can make your customer's "first dollar" decision as risk-free as possible by turning it into a step of security, offering a low-priced gateway product your customers can use to tiptoe into transformation.
This product needs to provide real-life value as a small scale solution at a no-brainer price.
Before creating a gateway product, you do need to understand your target customer enough to know their problems well, so you can still solve a real problem despite the small-scale product.
The product itself doesn't need to be a big money-maker for you, because once a customer makes their first purchase they are five times more likely to make another purchase than if they hadn't purchased anything from you before.
What Should Your Gateway Product Cost?
You need to pick a price point that is painless to your potential customer—but that price is relative, depending on the type of customer you’re serving and the range of prices your other products will cost.
If your average customer transaction is $10,000, then a $1 gateway product is probably too low.
If your average customer transaction is $50, however, then $1 or $2 is probably just about right.
There is no magic formula for this pricing; it is more art than science, but this is about psychology (and empathy).
In the mind of your Target Customer, what is a painless price point to take a chance on solving a real-life problem your customer has?
For Dollar Shave Club, this was their $1 razor. The price of their gateway product is literally built into their name!
As soon as you purchase the $1 razor, you learn about their $5 and $10 razors as well as the bath bags, shaving cream, and a host of other products they offer to solve related customer problems.
Obviously, the strategy paid off. Unilever bought Dollar Shave Club in 2016 for $1 Billion, cash.
Once you’ve selected your gateway product, make sure it is featured prominently in your business, wherever potential customers first interact with you online or off.
What you’ve just done is make the first purchase from a customer much easier because they don’t need to waste energy wondering “Where should I start?”
Of course, some customers will skip your gateway product and go straight for your other core products—but they'll do so with the gateway product in mind, as a reference.